To promote the restoration, conservation, and enhancement of wetlands through the establishment of a responsible wetlands mitigation banking program.

IN THE HOUSE OF REPRESENTATIVES

June 20, 1996

Mr. JONES introduced the following bill; which was referred to the Committee on Transportation and Infrastructure

A BILL

To promote the restoration, conservation, and enhancement of wetlands through the establishment of a responsible wetlands mitigation banking program.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the ‘Wetlands Restoration and Improvement Act of 1996’.

SEC. 2. FINDINGS AND DECLARATION OF POLICIES AND GOALS.

(a) FINDINGS- Congress finds that--

(1) half of the Nation’s wetlands have been destroyed through a failure to understand and appreciate the important environmental, hydrological, and social functions which wetlands serve, including--

(A) essential nesting and feeding habitat for waterfowl and other wildlife, including many rare and endangered species;

(B) fish and shellfish habitat;

(C) water storage, including natural flood and drought control and aquifer recharge;

(D) the enhancement of water quality;

(E) the provision of recreational, educational, and research opportunities; and

(F) opportunities for aesthetic appreciation;

(2) much of the Nation’s valuable wetlands have been significantly degraded, thus necessitating that activities that destroy wetlands adhere to a strict mitigation policy that involves sequentially avoiding impacts, minimizing impacts, and compensating for unavoidable impacts;

(3) where impacts are unavoidable, wetlands mitigation banking restores, enhances, and in exceptional cases, preserves and creates ecologically significant wetlands and provides for long-term restoration and enhancement of these vital resources;

(4) wetlands mitigation banking is not only consistent with the important Federal goal of no net loss of wetlands resources but, when conducted within the parameters of a thoughtfully designed regulatory program, contains the procedural safeguards necessary to greatly increase the overall number and quality of wetland resources;

(5) wetlands mitigation banks can be particularly effective in restoring, enhancing, creating, and preserving the valuable environmental functions of wetlands;

(6) mitigation banks often provide greater flexibility, reliability, and effectiveness in meeting mitigation requirements than on-site mitigation can and often have significant environmental advantages over haphazardly placed individual mitigation projects, such as--

(A) maintaining the integrity of a larger aquatic ecosystem by consolidating compensatory mitigation into a single large parcel;

(E) contributing towards attainment of the goal of no net loss of the Nation’s wetlands by providing opportunities to compensate for authorized impacts when mitigation might not otherwise be required, appropriate, or practicable;

(7) wetlands mitigation banking shows considerable promise for preventing and reversing the continuing net loss of wetlands while accommodating desirable economic and community growth and, if implemented on a widespread basis, may result in further progress toward restoring past losses of critical wetlands;

(8) the absence of Federal enabling legislation impedes the widespread and effective use of wetlands mitigation banking, while encouraging needless regulatory delay, financial uncertainty, and unproductive litigation; and

(9) the adoption of Federal enabling legislation providing for binding Federal standards governing wetlands mitigation banking will foster economic growth and environmental protection by providing the public, the regulated community, State and local governments, and potential investors reasonable assurance about the technical capabilities, financial soundness and integrity, and overall performance of large-scale wetlands mitigation banks and about the environmental acceptability of desirable projects relying on such banks to mitigate their unavoidable adverse effects on wetlands.

(b) DECLARATION OF POLICIES AND GOALS- Section 101(a) of the Federal Water Pollution Control Act (33 U.S.C. 1251(a)) is amended--

(1) by striking ‘and’ at the end of paragraph (6);

(2) by striking the period at the end of paragraph (7) and inserting a semicolon; and

(3) by adding at the end the following:

‘(8) it is the national policy to achieve, through regulatory and nonregulatory opportunities involving all levels of government and supported by private initiatives, the conservation and restoration of wetlands to increase the quantity and quality of the wetlands resource base of the United States and the policy of no overall net loss for the remaining wetlands resource base of the United States; and

‘(9) it is the national policy to foster wetlands mitigation banking as a means to mitigate the loss of wetlands and to do so by providing a stable, practical, and workable regulatory framework for the use of mitigation banking, making appropriate use of existing, successful State programs for mitigation banking, and taking into account regional variations in wetlands conditions.’.

SEC. 3. USE OF MITIGATION BANKS.

Section 404 of the Federal Water Pollution Control Act (33 U.S.C. 1344) is amended by adding at the end the following:

‘(u) USE OF MITIGATION BANKS-

‘(1) DEFINITIONS- In this subsection, the following definitions apply:

‘(A) CREATION- The term ‘creation’, as used with respect to wetlands, means an activity that brings a wetland resource into existence at a site where wetlands did not exist immediately prior to the activity.

‘(B) CREDIT- The term ‘credit’ means a unit of measure that represents the accrual or attainment of wetland functions at a mitigation bank.

‘(C) DEBIT- The term ‘debit’ means the loss of wetland functions at an impact or project site. Such losses shall be evaluated using the same scientific criteria as are applied to evaluate wetlands functions for credit purposes.

‘(D) ENHANCEMENT- The term ‘enhancement’ means an activity that increases any of the wetland functions of a wetland in existence prior to the date of enhancement.

‘(F) MAINTENANCE- The term ‘maintenance’, as used with respect to wetlands, means an activity undertaken to ensure continuation of a wetland or the accomplishment of a project goal after a wetland restoration, enhancement, creation, or preservation project has been completed, including hydrological manipulation and control of normative plant species.

‘(G) MITIGATION BANK- The term ‘mitigation bank’ means a person, chartered by the Secretary under this subsection, to conduct a specified wetland resource restoration, enhancement or, in exceptional circumstances, creation and preservation project or projects identified in its charter, each project undertaken for the purpose of providing mitigation credits to offset wetland losses authorized by the terms of permits allowing activities in the waters of the United States.

‘(H) PRESERVATION- The term ‘preservation’ means the protection of ecologically important wetlands in perpetuity through the implementation of appropriate legal and physical mechanisms and may include protection of upland areas adjacent to wetlands as necessary to ensure protection or enhancement of the aquatic ecosystem.

‘(I) RESTORATION- The term ‘restoration’ means an activity undertaken to return wetlands, former wetlands, or other aquatic resources from a disturbed or altered condition with lesser wetland acreage or fewer wetland functions to a previous condition with greater wetland acreage or wetland functions.

‘(J) SERVICE AREA- The term ‘service area’, as used with respect to a mitigation bank, means the designated area, typically a watershed or hydrologic unit within a State (or watershed crossing State lines), wherein the bank can reasonably be expected to provide appropriate compensation for impacts to wetlands resources.

‘(A) ISSUANCE- The Secretary shall issue a mitigation bank charter to a person whose application satisfies the criteria set forth in this subsection.

‘(B) APPLICATION- An applicant for a mitigation bank charter shall submit an application and supporting materials signed by a responsible official acting on behalf of the applicant certifying the accuracy of the information contained in the application and materials. The application shall show, at a minimum, the following:

‘(i) The proposed restoration, enhancement, creation, or preservation project or projects which are proposed to be included in the scope of the mitigation banking charter.

‘(ii) The proposed service area for each proposed restoration, enhancement, creation, or preservation project. The geographic designation of the service area should be based upon the cataloging unit of the ‘Hydrologic Unit Map of the United States’ (United States Geological Survey 1980). Each such service area shall be within a single State, unless the watershed or hydrologic unit in which the service area is located crosses State lines, in which case the service area shall be within the same watershed. If the watershed crosses State lines, the Secretary is strongly encouraged to resolve any interstate disagreement.

‘(iii) Reliable assurances of an adequate source of water to support the wetland.

‘(iv) Adequate legal control over the real property (including necessary uplands) in the proposed project to carry out the proposed work.

‘(v) Adequate financial assurances to carry out the proposed project, including the operation and maintenance plan. Such financial assurances shall be in the form of irrevocable letters of credit, performance bonds, surety bonds, trust funds, corporate guarantees by guarantors which meet financial criteria set by regulations issued by the Secretary, or a combination of such instruments and other financial undertakings. Such financial assurances shall entitle the Secretary to draw upon them in the event of a substantial failure to perform the work provided in the mitigation bank charter where mitigation credits based on such work have already been used or sold.

‘(vi) An adequate operations and maintenance plan to assure continued viability of the proposed project after completion of construction of the project.

‘(vii) Adequate legal protection, including easements, covenants running with land, or other appropriate, legally binding undertakings, to assure permanent protection of the wetlands in the mitigation bank that are used as the basis for selling credits. Such legal protections shall be in place at the time that the credits are withdrawn.

‘(i) an independent audit of the financial assurances on which the charter is based and a demonstration of continued compliance with financial assurance requirements;

‘(ii) a demonstration of a continued adequate long-term source of water to support the wetland;

‘(iii) a progress report in accomplishing the construction and operation and maintenance plan provided in the charter; and

‘(iv) a reconciliation of the number of credits sold during the previous years, the number of credits remaining, and any credits added in accordance with the requirements of this subsection and implementing regulations.

‘(D) DECISION DEADLINE- The Secretary, in consultation with the Environmental Protection Agency, and Federal and State authorities, as appropriate, shall decide whether to issue a mitigation banking charter within 180 days of the filing of a completed charter application. Prior to the issuance of implementing regulations, the Secretary shall do so on the basis of best professional judgment concerning compliance of the charter application with the requirements of this subsection.

‘(E) PROCEDURE WITH RESPECT TO APPLICANT AND OTHER AGENCIES- The Secretary shall advise the applicant within 30 days of filing whether the application is complete and advise the applicant in writing at that time of any additional materials which must be submitted in order to complete the application. The Secretary shall also transmit a copy of the complete charter application to the affected State, and to the Fish and Wildlife Service, the Environmental Protection Agency, the National Resources Conservation Service, and the National Marine Fisheries Service, each of which shall have 90 days, to run concurrently, in which to file written comments, which shall be part of the record. If no comments are filed within 90 days, these entities shall be presumed not to object to the charter.

‘(F) NOTICE-

‘(i) PUBLICATION- The Secretary shall publish notice of the charter application in the Federal Register and in a newspaper of general circulation in the proposed service area in which the mitigation bank is to operate (including the county in which the project is to be located), and shall make copies of the charter application and supporting materials available for public review at appropriate convenient locations in the service area.

‘(ii) CONTENTS- The notice shall describe the project or projects provided in the charter application, explain where supporting materials may be reviewed, and provide 30 days for the submission of comments on the compliance of the proposed application with this subsection. Upon request, the time for comment may be extended once for 30 days.

‘(G) DETERMINATION- After a review of public comments and any reply by the applicant and a determination of whether the application complies with this subsection, the Secretary may issue the charter, deny the charter, or issue the charter with modifications. The Secretary’s decision shall be based on the entire public record, including all public comments.

‘(H) PUBLIC HEARING- Upon a showing of a material contested factual issue about the compliance of the proposed application with this subsection, the Secretary shall provide notice and opportunity for a public hearing on the record with respect to the application.

‘(I) EXTENSION OF DEADLINE- The Secretary may extend the time for review once for 90 days, if additional time is needed to file comments, to provide for a hearing, to provide for further review of comments, or to provide for a reply to adverse comments.

‘(J) REIMBURSEMENT TO EXPEDITE REVIEW- The Secretary is authorized to accept reimbursement from a charter applicant for the direct salary and benefit costs of additional government or contract personnel necessary to expedite review of a charter application.

‘(K) AMENDMENTS- Additional projects may be added to a mitigation bank charter by amendment. Amendment applications shall be processed in the same fashion as charter applications, but the Secretary may treat the facts established in support of the charter and confirmed by the most recent annual report as established for the purpose of the amendment application process.

‘(L) STATE APPROVALS- The Secretary shall give substantial weight to State approvals of mitigation bank projects if the State programs under which such projects are approved require a careful review of the long-term operation and maintenance of the project, including provision of an adequate long-term source of water to support the wetlands and legal control over the real property in question and otherwise require similar conditions to those in this section.

‘(M) COORDINATION- The Secretary shall coordinate the processing of a mitigation bank application under this subsection with the processing of applications by such applicant for other permits and authorities under this Act and under the National Environmental Policy Act of 1969 so that determinations with respect to such other permits and authorities may be made concurrently with the final decision on the bank charter.

‘(N) REVOCATION- A mitigation banking charter may be revoked by the Secretary at any time (i) for substantial failure to comply with financial assurance, long-term water source, or other critical operating requirements, (ii) for a criminal conviction for making material false statements in the charter application or annual report, or (iii) for other substantial violations of law which demonstrate the unfitness of the holder of the charter to operate the mitigation bank. The charter may only be revoked after an opportunity for a public hearing on the record within the meaning of chapter 5 of title 5, United States Code.

‘(3) CREDITS-

‘(A) OFFERING CREDITS FOR SALE- Upon receipt of its charter, a mitigation bank may offer mitigation credits for sale. The maximum number of credits which a mitigation bank may offer for sale shall not exceed the number to which it is entitled based on--

‘(i) the number of acres of wetlands the bank has completed restoring, enhancing, and in exceptional circumstances, preserving or creating and provided financial assurance for their long-term operation and maintenance; plus

‘(ii) a limited number of the additional acres of wetlands for which the bank has provided adequate financial assurance that it will--

‘(I) create, restore, enhance, or preserve, and

‘(II) provide long-term operation and maintenance if the Secretary has approved the plans for such work, including a schedule for construction and there is adequate legal control over the real property to carry out the proposed work; minus

‘(iii) the number of credits it has previously sold based on the acreage described in clauses (i) and (ii).

‘(B) NUMBER OF CREDITS- The number of credits to which a chartered mitigation bank is entitled based on its acreage and the wetlands functions served by that acreage shall be determined according to objective criteria set by regulation or, if a completed charter application is filed before regulations are issued, according to objective criteria applied by the Secretary, using best professional judgment as part of the charter decision. The application of the objective criteria applied shall be set forth in detail

in the charter decision. The Secretary shall apply the same criteria to each mitigation bank in the same State and to mitigation banks in neighboring States which have overlapping service areas.

‘(C) REDUCTION OF CREDITS- The number of mitigation credits to which a mitigation bank is entitled shall not be decreased except by sale or upon a showing by the Secretary, after notice and opportunity for a public hearing, of the bank’s failure to comply with charter conditions resulting in the Secretary’s decision to draw on the mitigation bank’s financial assurances for the acreage on which such credits are based. If the Secretary draws on the mitigation bank’s financial assurances for all or part of its acreage, the Secretary may suspend the sale of credits based on that acreage in order to prevent irreparable harm, provided that notice and opportunity for a hearing to review the suspension decision is provided promptly thereafter.

‘(D) INCREASE IN CREDITS- The number of mitigation credits to which a mitigation bank is entitled may only be increased if the bank makes a factual showing in its charter application, or in an amendment application, that it is entitled to more credits under the objective criteria set by the Secretary by regulation or used by the Secretary in the exercise of best professional judgment in chartering or amending the charter of another mitigation bank in the same State or a neighboring State.

‘(E) DEBITS- If a permit issued by the Secretary to conduct activities in waters of the United States authorizes unavoidable impacts on wetlands and relies on a mitigation bank to offset such impacts, the Secretary shall use the same objective criteria to determine the wetlands mitigation debits from such permitted activity as is used to determine the wetlands mitigation credits at the relevant mitigation bank. Until the issuance or regulations, however, in no case shall a ratio of less than 1.5 credits for every debit be allowed.

‘(F) NO REGULATION OF PRICE- The Secretary shall not regulate the price charged for the sale of mitigation credits.

‘(4) STANDARDS TO BE ESTABLISHED-

‘(A) DEADLINES FOR REGULATIONS- Within 1 year after the date of the enactment of this subsection, the Secretary shall propose regulations implementing this subsection and shall promulgate such regulations not later than 18 months after such date of enactment.

‘(B) CRITERIA FOR CREDITS- Such regulations shall set forth objective criteria by which the number of credits to be yielded by a mitigation banking project may be determined and shall take into account the wetlands functions served by the wetlands restored, enhanced, created, or preserved by such project, as well as the environmental benefits served by the adjacent uplands included in such mitigation banking project. Such objective criteria shall also establish a preference for restoration or enhancement of degraded wetlands but also provide for the preservation of high quality wetlands if such preservation results in a demonstrable benefit to the watershed and there is a demonstrable threat to the wetlands and creation of wetlands where there is a high likelihood for ecological success with adequate financial undertakings, long-term source of water, and appropriate legal control of the realty to assure their long-term maintenance and viability.

‘(C) CRITERIA FOR SERVICE AREAS- Such regulations shall set objective criteria by which mitigation bank service areas are to be determined, taking into account the need to set service areas at a size providing a reasonable prospect of vigorous market competition among large scale mitigation banks while ensuring that the bank effectively mitigates for unavoidable wetland impacts. Such regulations shall provide that an activity in waters of the United States permitted under this section which activity is a linear utility facility and is otherwise partially within a service area shall be eligible to purchase mitigation credits from a mitigation bank within the same State. Such regulations shall establish a preference for using a mitigation bank to mitigate an activity which is part of a single and complete project which disturbs less than 5 acres of wetland in a mitigation bank.

‘(D) PREFERENCE FOR IN-KIND COMPENSATION- Such regulations shall establish a preference for in-kind compensation of wetland impacts. Out-of-kind compensation may be acceptable only if there is clear demonstration that it is environmentally preferable to in-kind compensation.

‘(E) IMPLEMENTATION STRATEGY-

‘(i) DEVELOPMENT- The Secretary shall develop a State-by-State implementation strategy and report its findings and conclusions to Congress and the public within 1 year after the date of the enactment of this subsection. Such strategy shall be used, in part, to assist the Secretary in proposing and promulgating regulations under this subsection.

‘(ii) REVIEW- In developing the strategy, the Secretary shall examine the progress of pending applications to establish mitigation banks under prior guidance documents, identify reasons for delay of any such application pending for more than 6 months, and report alternatives to streamline the processing of future applications.

‘(iii) IDENTIFICATION OF WETLANDS- In developing the strategy, the Secretary shall seek to identify, in consultation with the appropriate agency of each State, substantial acreage of degraded wetlands which need significant physical alteration to the current hydrology in order to substantially recover their natural wetlands functions. Of the tracts of wetlands so identified, the study shall identify those where physical restoration work through private mitigation banking could begin in the next 3, 5, and 10 years.

‘(iv) TRIENNIAL REPORTS TO CONGRESS- Not later than 4 years after the date of the enactment of this subsection, and every 3 years thereafter, the Secretary shall make a written report to Congress about the progress of restoring the tracts of degraded wetlands identified in the initial report. The progress report shall first be issued in draft form, and the Secretary shall receive comments from the public about the accuracy of the information contained in the draft progress report, for 60 days. The final version of the progress report shall be revised after consideration of the public comments and submitted to Congress not later than 90 days after the close of the comment period.’.

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